Inside Apple: Adam Lashinsky Revealing and Well-Crafted Book

Last week, I opened up my copy of Adam Lashinsky's new book, Inside Apple. It was about 8 at night, and I figured I would read the first chapter and do something else. Well, I looked-up, and it was 1:30 in the morning, and the book was done. Frankly, a business book hasn't grabbed me like that in a long-time. Adam not only writes well, he provides the most complete picture you can find of how Apple actually is organized, how they divide-up the work, the pecking order, the mindset -- the kind of stuff that people like me who are interested in organizations want to know.

This is not an authorized book like Isaacson''s blockbuster Steve Jobs. But Adam has been following Apple for many years as a reporter at Fortune, and before that, at the San Jose Mercury. He did many interviews with former Apple employees, and although it is unclear how much access that Apple allowed him (and knowing Apple, he likely isn't allowed to say), I can tell you that I've talked to several journalists over the years who have complained that he gets better access than the rest of them. He also does a great job of capturing the complexity and hypocrisy of the place. I especially loved this paragraph late in the book, on page 175:

Apple is company of paradoxes. Its people and institutional bearing are off-the-charts-arrogant, yet at the same time, they are genuinely fearful of what would happen if their big bets go bad. The creative side of the business that was dominated by Steve Jobs is made up of lifers or near lifers who value only an Apple way of doing things -- hardly the typical creative mind-set. The operations side of Apple runs like any company in America, but better, and is led by a cadre of ex-IBMers, the cultural antithesis of Apple. Apple has an entrepreneurial flare yet keeps people in a tightly controlled box, following time-tested procedures. Its public image, at least seen through its advertising, is whimsical and fun, yet its internal demeanor is cheerless and nose-to-the grindstone.

Good stuff, huh? I was interested in Adam's opening arguments that Job's was a productive narcissist, which he linked to Michael Maccoby's Narcissistic Leaders and to The No Asshole Rule a bit too. Many other things about the book were interesting, but three especially stood out for me, and reinforced my beliefs (and now some concerns) that I voiced in my post last year 5 Warning Signs to Watch for at Apple:

1. Apple is nearly the exact opposite of the kind of organization hyped by people like Gary Hamel and even Peter Drucker. It is centralized, secretive, fear-ridden, punitive, and not much fun for most people who work there. But it works because the pieces of the "organizational design" fit together, or at least did fit together when Jobs was there, in an elegant way. The secrecy is so severe that, when products are launched, even senior people are surprised by the final product because people are on a strictly "need to know" basis. But this is offset with a system of roles and responsibilities -- and crucial to all of it-- is what Apple calls the DRI, the directly responsible individual, a centerpiece of the organization. There is clear responsibility placed on individuals, not so much on groups and committees. Although groups and some committees do exist, the DRI can always be found and is where attention is focused. Which means that that it is clear where to go to provide guidance, to integrate their work with others, and who will be fired, blamed, and replaced -- and celebrated too.

Essentially, and you can see this in the organization chart on one of the first pages of the book, Apple is designed so that all major (and many minor) decisions are made by a very small group of people, they are not influenced much by suppliers, customers, 99.9% of employees or anyone else; rather is what my friend John Lilly calls a "genius driven" organization. So, with Jobs gone, the question on the table is if the brilliance of CEO Tim Cook and a few others like Jonathan Ive (head of design) and Scott Forstall (head of IOS software) can sustain the firm's dominance and creativity. These are mighty smart people and they have been slowly weaned from Jobs as he was so sick for so many years. But the design of the organization places more pressure on senior executives doing the right things than any large company I know.

In contrast, other organizations have decentralized systems where numerous semi-autonomous businesses are responsible for their own profits and losses, and top executives are essentially managing a portfolio. HP operated quite successfully this way for decades under Hewlett and Packard. The had numerous divisions (I recall about 45 when I first got to Stanford in 1983), and it was run by what some insiders called the "mafia model:" if your business was sufficiently profitable (around 10% net profit per year as the going rate as I recall), you simply paid that "protection money" to corporate, and you could do whatever you wanted within reason. If your numbers were lower, you would get "help," and if they didn't improve or if senior management lost faith in you, you were removed. Certainly, this kind of structure places pressure on leaders to prune, merge, and start new businesses --and to deal with overlaps and conflicts between businesses -- but such a structure spreads the leadership chores -- and risk -- among multiple teams, each of which acts with great autonomy. (Google is much more decentralized than Apple, for example, but is moving to become more centralized. For example, when Larry Page took over as CEO, they had so many products done by so many different decentralized groups he went to Wikipedia to get a list of them all--and then he and his team started trimming them).

My point here, and this follows an old conceptual perspective called "contingency theory," is that other organizations that want to be like Apple --and that seems like so many now -- need to be especially careful about copying individual pieces, because the reason it works is that the multiple elements fit together.

2. I am very impressed with how thoughtful Apple's team is about allowing people to focus on what they are doing, and to not be distracted by so many of the other things that most organizations expect from their people. They don't believe in the concept of general managers. They don't give groups or businesses P&L's... there is only one, that is for the whole company. They focus on saying "no." As Adam quotes Jobs, his "Focus is not saying yes. It is saying no to really great ideas." This "elegance is refusal" philosophy is extended to strategy and organizational design as well. There are simply a lot things that weigh on many managers and employees at other places that aren't present or are less present at Apple. Managers aren't asked to be responsible for a local P&L, they know amazingly little about what is going on in other parts of the company, they aren't asked to go to as many meetings or be on as many committees and are instead expected to do what they do perfectly and as little else as possible.

This focus on simplicity and reduction of load is also seen in the emphasis on keeping teams as small as possible. The tendency to make teams ever bigger is an awful disease, not so much because it costs more money, but because, as Harvard's J.Richard Hackman has shown, it slows teams and undermines their performance as members end-up spending more time dealing with coordination issues and coalitional battles and less time doing the work at hand. Apple gets the importance of small teams at all levels (e.g., Adam reports that a 2 person team "wrote the code for converting Apple's Safari browser for the iPad, a massive undertaking”). They also have an unusually small board of directors -- seven members -- for a company of that size.

This extension of the elegance philosophy beyond their products has huge advantages as the "signal to noise" ratio appears to be quite impressive at all levels and in all functions -- people tend to get good information, the information they need (and no more), and aren't confused or distracted by other things. At senior levels, this means they get the information they need and it means that, although there is discussion and debate at times, when a decision is made, there is less of the usual arguing or undermining. And if there are failures in implementing, you will be forgiven if senior executives believe you acted intelligently enough and hard enough, but you will be shown the door very quickly if they believe you were dumb or lazy.

3. Adam did a great job of describing the company with all its warts and negative side-effects. I was struck by how Apple is a place that is driven by the pride of doing great work, that it was not about having fun. That it is was also not about getting rich for most employees. Apple pays competitive salaries for Silicon Valley, but not at the very top of the market like NetFllix. And only a few employees who were in early made big fortunes from the stock. In fact, Jobs hated talking about money.

My personal reaction, and others no doubt have different motivations and preferences, is that it would be an awful place to work. The extreme secrecy means there is extreme paranoia. It means you often don't even know a lot of co-workers, let alone what they are working on -- and if you ask them, you can get in big trouble. Fear is everywhere. Apple seems to take pleasure in pushing around other companies -- competitors, suppliers, and those that just get in the way -- just because it can. And, let's face it, while Jobs was one of the most effective assholes in history, he was still an asshole (Isaacson reported he went through over 70 nurses before finding 3 he liked). I worry that the bully worship that has emerged in the wake of Jobs death has not only apparently been long institutionalized at Apple, it is now being imitated and gloried by people who lack Jobs' obsessive genius and who are not embedded in an a system that is designed to amplify the best qualities of a obsessive perfectionist and to dampen the worst.

Jobs said the journey is the reward, a nice sentiment, and I like the pride, thirst for excellence, and action orientation that Adam describes, but spending my days deep in fear, paranoia, and secrecy isn't for me. Life is too short.

In any case, if you can't get a job at Apple or don't want to,Inside Apple provides the best -- most complete and balanced -- coverage of how the place works, the elements you might want to copy, and those that you might avoid -- that Apple has apparently succeeded DESPITE rather BECAUSE they are used.

There's an interesting piece in today's FT by John Kay (also on his personal) site around the fallacy of composition - in re-reading your piece tonight it seems there are parallels between the points made here and in Kay's article - sometimes decomposition misses the point that it's a system, not a collection of parts. One question around Apple - was it designed that way or did it happen and then get refined?

Adam and Bob, thanks for the further clarification regarding the book. It looks interesting enough that we have ordered it sight unseen as on of the texts for our MBA course on understanding changes in information technology

Adam Lashinsky here, and I can comment to George Lehman. The negative reviews he is referring to indeed are to the e-book that was published in May and sold for 99 cents. It is my original article in Fortune, and we sold it for 99 cents at a time it was not available on the Fortune.com web site. Some readers felt understandably misled that they were getting a book, not a magazine article, though in fairness this was not priced as a book. Please rest assured that the BOOK Bob reviewed is a new work, published next week but already available in hard cover at many book stores and from online booksellers, including Amazon. The e-book will be released Jan. 25. Thanks a million.

George, thanks. Two things. First, I just went to Amazon and it says it is shipping and gave me a price of I think 16.43. Second, yes, there was prior article, but this goes miles deeper. It digs into many nuances and angles that are not in the book, and also offers more implications for other companies and more analysis. I have read both, and that is an unfair thing to say, and I suspect it mostly comes from people who have not read both. There is a lot there.

Bob, I went to Amazon to order this book and got a "Pricing information not available" message. I also saw lots of negative reviews suggesting the the books was really a glorified magazine article.
Is the book in the middle of some sort of expansion/revision?
I liked your review and would like to see the book.

I appreciate your honest opinon of this book, inlcuding your view that Apple isn't the place you would like to work or, as you put it "an awful place to work". And I am forever mindful of the fact that you are entitled to your opinion and respect that. What I would like to say is that "fear" is in the mind. A pursuit for excellence, the pursuit of utter simplicity and beauty, the desire to be a cut above, the need to be mesmermized by the product and the absence of any room for mediorcity cannot be learnt (in most cases) and is innate. That mindset has no room for fear, except a fear of failing oneself. It drives a person and pushes you towards as close to perfect as you can get. I get that and understand it completely. Jobs was right in saying the journey is the reward. I would go one step further and say achievement is but a happy by-product of that journey. The thirst for excellence produces confidence. I would question whether it leads to "spending days in fear and paranoia", becuase in my mind there is no room for fear or paranoia in the quest for perfection, excellence and genius.